Strategy, investment and policy for a strong and sustainable recovery: An action plan
A CEP COVID-19 analysis: Paper No.005
The UK and the world have suffered disruption and hardship from the COVID-19 pandemic on an immense scale. Together with the tragic consequences of the health crisis, there is now a real risk of protracted global depression. Strong and timely action can increase confidence, steer expectations and channel productive private and public investment into a sustainable, inclusive and resilient recovery across the UK. The recovery can be embedded in an understanding of, and commitment to, ‘building back better’ by delivering on the Government’s strategic objectives including reaching net-zero greenhouse gas emissions by 2050.
This briefing paper, produced by the LSE’s Centre for Economic Performance and co-authored by Grantham Research Institute staff and associates, sets out the key areas where strong economic policies and institutions will be needed to foster investment. It builds on the discussions that took place in the Royal Economic Society’s webinar series on a ‘Strong and sustainable recovery from COVID-19’, chaired by Professor Lord Stern. Full recordings of the webinars can be found here.
Critical actions highlighted by the report include:
- Setting a clear macroeconomic vision to restore confidence, create jobs and grow the economy out of post-COVID-19 recession and debt
- Institutional reform to expand capacity, build back better, create new opportunities for all and manage long-run risks
- Building capacity and resilience by investing in vital assets, including:
- Physical capital, boosted by leveraging private finance through creating new markets and establishing a new National Investment Bank
- Human capital, enhanced by creating the skills and jobs necessary for the 21st century
- Knowledge capital and innovation, fostered by accelerating the drive to reach a target for R&D investment of 2.4% of GDP through a mixture of increased funding and further incentives for business innovation, including enhanced incentives for clean innovation
- Natural capital, strengthened directly through carefully designed ecosystems creation, preservation and restoration project
- Social capital, enhanced by developing a vision and strategy for an inclusive and sustainable recovery that can gain support from businesses and communities and creates opportunities for all